Case Summary (G.R. No. 151966)
Issues Presented
- Whether the administrator’s use of estate income to pay for renovation and improvement of the family residence was a legitimate expense of administration.
- Whether living expenses incurred for an occupying heir who paid no rent may be charged to the estate.
- Whether various miscellaneous expenses claimed by the administrator are allowable administration expenses.
- Whether the irrigation fee claimed is a proper deduction as an expense of administration.
Legal Framework on Administration Expenses
- Executors and administrators are entitled to incur necessary expenses in the care, management, and settlement of the estate and are accountable for all estate assets and income that come into their possession (see Rules of Court cited above).
- The court must examine an administrator under oath before allowing accounts where objections exist; interested parties have the right to cross-examine and offer rebuttal evidence.
- Administration expenses are confined to reasonable and necessary expenditures for preserving the estate, protecting it from deterioration, and enabling management, liquidation for payment of debts, and distribution (citing Lizarraga Hermanos v. Abada and established Rules of Court principles).
Analysis — Renovation and Improvement Expenses (P10,399.59)
- Items: construction of fence (P3,082.07), renovation of bathroom (P1,389.52), repair of terrace and interior (P5,928.00).
- The probate court allowed these items under Rule 84, sec. 2 duty to maintain houses, structures and fences in tenantable repair and to deliver them so to heirs or devisees when so directed by the court.
- Five of eight co‑owners consented to using estate funds for these repairs; the repairs benefitted all co‑owners by preserving the house, maintaining its social utility, and preventing deterioration.
- Applying the test for necessary administration expenses (preservation and productivity of the estate), the Court held these disbursements were proper charges to estate income. The lower court’s allowance of these items was affirmed.
Analysis — Living Expenses of Occupying Heir (P1,603.11)
- Items: house helper salary (P1,170.00), light bills (P227.41), water bills (P150.80), gas/oil/floor wax/switch nail (P54.90).
- The probate court had allowed these on the theory that occupancy by one heir did not deprive the others of the right to live in the house. The Supreme Court disagreed.
- These items were characterized as personal living expenses of Librada de Guzman, who occupied the family residence without paying rent and thus primarily benefited personally. They do not fall within the scope of reasonable administration expenses incurred for care, preservation or management of the estate.
- Conclusion: These items must be borne by the occupying heir (or charged against her share), not the estate. The allowance by the trial court was reversed and these expenses disallowed.
Analysis — Other Miscellaneous Expenses (P558.20)
- Items individually considered: lawyer’s subsistence (P19.30), gratuity in lieu of medical fee to physician (P144.00), stenographic notes (P100.00), food for the first death anniversary (P166.65), cost of publication of death anniversary (P102.00), representation expenses (P26.25).
- The Court found:
- Stenographic notes (P100.00): admitted by the administrator to be improper; disallowed.
- Representation expenses (P26.25): unexplained by administrator; disallowed.
- Expenses for the first death anniversary celebration (totaling P268.65 for food and publication): have no nexus to care, management or settlement of the estate and are therefore not allowable (citing Nicolas v. Nicolas); disallowed.
- Lawyer’s subsistence (P19.30) and physician gratuity (P144.00): deemed allowable as incidental to administration and care of the decedent or administration tasks; these items were allowed.
- Net effect: part of the miscellaneous items were disallowed and part allowed, as specified.
Analysis — Irrigation Fee (P1,049.58)
- The appellants suggested possible duplication with another irrigation allotment item (P1,320) for the same crop year. The administrator explained that the P1,320 represented allotments to tenants treated as farming expenses; the P1,049.58 was supported by an official receipt showing payment to the Penaranda Irrigation System (OR No. 3596378 dated April 28, 1967) and was included as farming expense in the accounting.
- The appellants did not dispute the re
Case Syllabus (G.R. No. 151966)
Facts of the Case
- Decedent: Felix J. de Guzman of Gapan, Nueva Ecija, who left a will duly probated; survived by eight children: Victorino, Librada, Severino, Margarita, Josefina, Honorata, Arsenio and Crispina.
- Letters of administration were issued to son Victorino G. de Guzman (a doctor) pursuant to the order dated September 17, 1964 of the Court of First Instance of Nueva Ecija in Special Proceeding No. 1431.
- One of the decedent’s properties was a residential house located in the poblacion; under the testator’s will that house and the lot were adjudicated pro indiviso to the eight children, each receiving a one-eighth share in a project of partition dated March 19, 1966 signed by the eight heirs and approved by the lower court’s order of April 14, 1967, “but without prejudice to the final outcome of the instant accounting incident.”
- The administrator submitted four accounting reports covering June 16, 1964 to September, 1967.
- Three heirs—Crispina de Guzman-Carillo, Honorata de Guzman-Mendiola and Arsenio de Guzman—objected to administrator’s disbursements totalling P13,610.48, which were itemized as follows:
- I. Improvement and renovation of the decedent’s residential house:
- Construction of fence: P3,082.07
- Renovation of bathroom: P1,389.52
- Repair of terrace and interior of house: P5,928.00
- Subtotal: P10,399.59
- II. Living expenses of Librada de Guzman while occupying the family home without paying rent:
- House helper salary: P1,170.00
- Light bills: P227.41
- Water bills: P150.80
- Gas, oil, floor wax and switch nail: P54.90
- Subtotal: P1,603.11
- III. Other expenses:
- Lawyer’s subsistence: P19.30
- Gratuity pay in lieu of medical fee: P144.00
- Stenographic notes: P100.00
- Food served on decedent’s first death anniversary: P166.65
- Cost of publication of death anniversary: P102.00
- Representation expenses: P26.25
- Subtotal: P558.20
- IV. Irrigation fee: P1,049.58
- Total claimed disbursements objected to: P13,610.48
- I. Improvement and renovation of the decedent’s residential house:
- The probate court had earlier, in an order of August 29, 1966, directed the administrator “to refrain from spending the assets of the estate for reconstructing and remodelling the house of the deceased and to stop spending (sic) any asset of the estate without first securing authority of the court to do so.”
- The lower court, by order of April 29, 1968, allowed the disputed items as legitimate expenses of administration; the three oppositors appealed to the Supreme Court.
Procedural History
- Will probated; letters of administration issued (C. of I. No. 1431, order dated Sept. 17, 1964).
- Project of partition dated March 19, 1966 signed by eight heirs; approved by lower court April 14, 1967 subject to accounting incident.
- Probate court order of August 29, 1966 restrained administrator from spending estate assets for reconstruction/remodeling without court authority.
- Administrator filed four accounting reports covering June 16, 1964 to September, 1967.
- Lower court (probate) allowed the disputed expenditures in order dated April 29, 1968.
- Three oppositors (Crispina, Honorata, Arsenio) appealed the allowance of the expenditures to the Supreme Court (G.R. No. L-29276); Supreme Court issued decision on May 18, 1978.
Legal Issues Presented
- Whether the administrator properly charged the estate’s income to pay for (I) improvements/repairs to the family residence, (II) living expenses of an occupying heir who paid no rent, (III) miscellaneous items (stenographic notes, representation expenses, death anniversary expenses, lawyer’s subsistence, gratuity to physician), and (IV) an irrigation fee.
- Whether the probate court erred in approving utilization of estate income (from rice harvests) to defray the disputed expenditures allegedly not allowable under the Rules of Court.
- Whether certain listed items constitute necessary and reasonable expenses of administration under the applicable provisions of the Rules of Court and applicable jurisprudence.
Applicable Law and Rules Cited
- Executor/administrator entitlement and accountability:
- Sec. 3, Rule 84, Rules of Court: administrator is entitled to possess and manage decedent’s real and personal estate as necessary for payment of debts and expenses of administration; accountable for whole estate in his possession with interest, profit and income thereof and proceeds of sold estate at the price sold.
- Sec. 2, Rule 84, Rules of Court: administrator’s duty to “maintain in tenantable repair the houses and other structures and fences belonging to the estate, and deliver the same in such repair to the heirs or devisees” when directed by the court.
- Secs. 1 and 7, Rule 85, Rules of Court: relevant to administration accounts (as cited).
- Sec. 1(c), Rule 81 and secs. 8 and 9, Rule 85, Rules of Court: regarding conditions of bond and the court’s power to examine the administrator under oath and the right of heirs/legatees/creditors to be examined on matters relating to administration accounts.
- Sec. 10, Rule 85, Rules of Court: practice of holding hearing before an administrator’s account is approved, especially when objections are raised.
- Jurisprudence cited by the Court and parties:
- Lizarraga Hermanos vs. Abada, 40 Phil. 124: defines administration expenses as reasonable